Painful, political budget year approaches for Pa.
HARRISBURG - Nothing concentrates the mind of an elected state official better than having a difficult state budget in an election year.
This scenario usually doesn't happen because politicians of both parties do everything in their power to make an election year budget as painless as possible and shove off any fiscal problems until the next year. But it's a real threat in 2014 when Gov. Tom Corbett, House lawmakers and senators representing even-numbered districts are on the ballot.
Pennsylvania faces a $839 million budget hole out of a $28 billion budget despite tax revenue collections meeting expectations so far, according to a forecast by the state Independent Fiscal Office (IFO).
Pennsylvania must balance its annual budget between spending and revenue, unlike Washington, so this hole can't be ignored.
The hole is being created by hefty increases in state government contributions for pensions and health care for public employees, limited revenue growth and less surplus money to carry over from the preceding year, the IFO said.
Demographic trends are playing havoc with state finances, the fiscal office added. The number of working-age residents will remain the same for the rest of the decade, while residents over age 65 will increase by one-third.
"These demographic trends will diminish tax revenues and place additional pressure on expenditures such as Medical Assistance," the IFO said.
We're entering the season where the first proposals are surfacing to address this situation.
State Budget Secretary Charles Zogby plans to give his mid-fiscal-year budget briefing this week.
"The IFO report should be a wake-up call," said Senate Minority Leader Jay Costa, D-43, Pittsburgh, last week.
The Senate Democratic caucus presented a host of ideas - some old, some new - to fill the hole without resorting to deep spending cuts or tax hikes.
They include a full-fledged expansion of Medicaid to cover the uninsured, bringing in $400 million in federal aid; modernizing operations of the state liquor stores for $125 million; and a tax on smokeless tobacco products bringing in $36 million.
And budget concerns have already led to an expansion of gambling.
The new state law legalizing several small games of chance for taverns allocates 60 percent of the revenue to the taxpayer-supported General Fund.
The quickly abandoned effort by the Senate last week to fast-track sweeping changes to the Pennsylvania Lottery was prompted in part to help the General Fund, said Senate Majority Leader Dominic Pileggi, R-9, Chester.
The proposal to privatize Lottery management, legalize keno and provide a school property tax freeze to senior citizens remains live issues into the new year.
"It's no secret we have a very difficult budget," said Pileggi.
(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. Email: email@example.com.)